Sunday, March 9, 2014

Check your statements! ~ is
perhaps a golden rule….. in UK,
it is reported that millions face shock
bills for payments made on smartphones and tablets…. Do you care to check your
salary statement and EMI statement and more !!!!

Life is uncertain ~ planning
the future becomes increasingly difficult in an ever increasing inflationary
World. Life insurance contracts comes in
handy to protect the lives of the individual as also make some financial long
term planning for the future. The policy
holder typically pays a premium, either regularly or as a lump sum ~ for
guaranteed returns + bonuses. Life policies are legal contracts and the terms
of the contract describe the limitations of the insured events. Life-based
contracts tend to fall into two major categories of Protection policies
(designed to provide a benefit in the event of specified even) and Investment
policies (with the main objective of future growth)

Far away from the relaxed way
of life that existed a few decades ago - work hard, save a lot and retire early
seems to be the dream of many belonging to the Indian salaried class today. But
truth is, even if you manage the first two actions, the third may prove
difficult as the savings may not be enough to take care of a relaxed retired
life, which can be ensured by regular income plans. After a long hiatus, life
insurance companies have recently begun to re-launch their pension plans, with
assured returns as mandated by the insurance regulator. In finance An annuity
is a series of payments made at fixed intervals of time. A life annuity is a
financial contract in the form of an insurance product according to which a
seller (issuer) — typically a financial institution such as a life insurance
company — makes a series of future payments to a buyer (annuitant) in exchange
for the immediate payment of a lump sum (single-payment annuity) or a series of
regular payments (regular-payment annuity), prior to the onset of the annuity.

The expectation is that the
pension policy must assure capital protection and pay more. For sometime Unit
linked policies were a big hit as they offered the benefit of equity exposure
with basic protection. When there is
minimum guarantee, the Insurers will
play it safe and will not offer risky
equity-linked fund options. So longterm
planning is difficult – but after reading this article from Daily Mail, you may
perhaps be forced to rethink your plans and recalculate whatever you get,
viewing it with doubt !!!

Daily Mail of 8.2.14 reports
that Insurer formerly known as Norwich Union faces huge payouts over breaches
of terms and conditions. The post states
that more than four million savers have been left out of pocket by a series of
failures spanning a decade at Britain’s
biggest insurer. Aviva made hundreds of technical errors which
resulted in underpayments over a number of years, some totalling thousands of
pounds. The insurer, which was formerly known as Norwich Union, has now been
forced to come up with a total of £323million in order to compensate its
customers. But many – including people with personal pension plans, workplace
pensions, life insurance cover and savings – are still yet to be contacted
about the mistake. Although a number of savers have already received
compensation, some of those affected are elderly and may not live long enough
to get their money back.

Aviva has known about the
errors since 2007 and has been quietly setting aside money to cover its
compensation bill. But it failed to admit the scale of the problem until being
contacted for an investigation by the Daily Mail’s sister website Thisismoney.
To date, Aviva has paid out £180million to affected customers – but an
estimated £143million still needs to be paid out to around 500,000
policyholders. An industry source said: ‘This whole thing is an absolute mess
and Aviva’s handling of it has been a total shambles. ‘It is something the
company has been aware of for many years and yet they’re not getting any closer
to the root of the problems. In fact, they’ve been finding that the failures
have been multiplying, affecting hundreds of thousands more policyholders in
the process.’ Problems are believed to have started after the merger of Norwich
Union and CGU in 2000. Policies run by both groups were transferred to a
central system. But many of the specific terms and conditions in customer
contracts were not applied correctly.

Some customers complained
to the independent consumer watchdog the Financial Ombudsman Service after
spotting inconsistencies in their policies. For their complaints to have got as
far as the ombudsman, Aviva would have had to investigate them and then reject
their concerns. It was only after enough complaints had reached the ombudsman
that they started to launch a full-scale investigation. The probe uncovered a
huge range of problems – wrong income tax rates had been used on pension plans,
there were problems with how pensioners’ savings had been invested, and some
people had been told that the value of their funds would not lose money, when
in fact they could. Among some of the worst affected were people who had taken
out endowment plans under the brands Norwich Union and CGU, who may have lost
up to 20 per cent of the value of their savings.

Initially, 196 errors with
products were investigated. As of April last year, this had ballooned to 358.
And the mistakes are so complicated that it could take another decade to
correct them all. The errors were
reported to the Financial Services Authority regulator in 2007. But
astonishingly, they never made an announcement to consumers – or Aviva’s shareholders
– and instead simply allowed the firm to sort out the issues behind closed
doors. The FSA monitored the repayment programme which the insurer started two
years later. Details of the compensation scheme were never formally set out by
Aviva. However, buried in its company reports for 2007 is a mention of a
reserve to cover ‘compensation costs for known governance issues’.

An Aviva spokesman said:
‘We stand by the promises we make to customers. If we get something wrong we
always put it right.They added: ‘Like many large UK insurance companies, reviews are
an ongoing part of our business. Customers can be reassured that if we identify
an error we’ll do the right thing and put it right.’

Astonishing is the
way technology and major Companies work and treat their customers...